3. Key Recommendations

• African finance institutions need support to deepen their engagement with green finance. For instance, they need to develop specific green financial products for their respective regions and also improve communication with their clients about green finance products; what they could be used for, and the expected returns. African governments can also play a key role in encouraging and facilitating the allocation of domestic financial resources to green investments. Regional collaboration mechanisms should also be established to identify priority transnational climate-friendly projects. African DFIs need to enhance their collaboration with governments to support national innovation systems, including trade facilitation, competition policy, and the promotion of better state-business linkages.

• African DFIs need to cooperate to scale up climate finance for Africa. Given that there are close to 100 DFIs in Africa, a cooperation agreement must be established to coalesce these institutions to work together to provide climate finance. By creating a collaborative mechanism or framework, DFIs can draw on their experiences and knowledge to induce collective action and learn to finance climate mitigation, adaptation, and resilience projects.

• African policymakers need to explore how to combine adaption-focused public funds with private funds in novel and innovative forms. For example, Gabon, the world’s second most forested nation, is planning to release a record 90 million carbon credits onto the voluntary carbon market to finance the conservation of its carbon-absorbing forests. The country has created credits via the United Nations Framework Convention on Climate Change’s REDD+ mechanism. The carbon credits will be “marketed by the country’s sovereign wealth fund and sold via a new platform, redd.plus, a collaboration between S&P Global’s IHS Markit, CBL commodity exchange, and the Coalition for Rainforest Nations.”9 Priced between USD 20 and USD 30 per credit, the plan could earn Gabon about USD 1.8 billion. The government plans to use the revenue from sales for a biodiversity fund, a community development fund, to refinance debt, and expand its sovereign wealth fund to invest in climate-resilient infrastructure.10

• Public funding for adaptation measures needs to increase. Adaptation investments can reduce the hardship incurred by climate change in Africa. Adaptation costs for Africa are estimated at approximately USD 20-30 billion per annum over the next 10 to 20 years.11 However, to date, only USD 130 million of the USD 350 million adaption funding approved for Africa has been disbursed.12 There is a need to focus energies on securing funding for adaptation measures from the public sector. This can be done through sector-specific national adaptation plans (NAPs), especially for climate-sensitive sectors such as agriculture, health, water, and energy. These plans also need to be clearly articulated – identify the climate risks and adaption measures, and also outline strategies to accrue public finance and implement the identified adaption measures.

• Improve the technical capacity of state agencies. The limited capacity of some state entities to prioritise projects and present proposals affects a country’s ability to access climate-related finance. Some state agencies also do not have adequate project appraisal and procedures in place to evaluate whether a project meets external funders’ requirements. As such, there is a huge need for professional and technical upskilling, especially for public sector

9 Michael Kavangh. (2022, 14 October). Carbon Credits Seen Fetching as Much as $35 a Ton. Bloomberg https://www. bloomberg.com/news/articles/2022-10-14/gabon-carbon-credits-seen-fetching-as-much-as-35-a-ton?leadSource=uverify%20wall

10 Michael Kavangh. (n.d.). Carbon Credits Seen Fetching as Much as $35 a Ton

11 African Development Bank (AfDB). (2011). The Cost of Adaption to Climate Change in Africa https://www.afdb.org/ fileadmin/uploads/afdb/Documents/Project-and-Operations/Cost%20of%20Adaptation%20in%20Africa.pdf employees – ongoing technical capacity training is also imperative for improving the effectiveness of state agencies in lobbying for climate finance. Training and courses should focus on project preparation, procedures, and evaluation to help with project prioritisation and the production of proposals.13 Simultaneously, trainees must also be taught about data gathering and selection skills that can support project justification.14

12 AfDB. (n.d.). The Cost of Adaption to Climate Change in Africa.

• Knowledge building to help attract financing. A lack of (or access to) data significantly hampers African agencies from accessing available climate financing options. African countries need to either, at a regional or continental level, curate available data into a single database, making it easier for all public, private, and international stakeholders to access data that can inform decision-making and consequently help determine available financing options. A major African DFI, either the African Development Bank or AfriExim Bank, could spearhead the development of such a database.

• Developed countries can be more active in helping developing economies secure climate finance through energy transition partnerships. South Africa’s Just Energy Transition Partnership (JETP) with some Global North donor countries is an apt case study. Through this JETP, South Africa mobilised USD 8.5 billion in climate finance. “The concept of JETPs as country platforms for the support of energy transitions in developing economies has attracted significant interest from across development and climate finance communities.”15 As such, various questions have emerged:16 Can JETPs provide an effective model for financing low emissions and climate-resilient development? What can be learnt from the South African experience? Can JETPs work for Africa at large, and if so, how? The South African JETP needs to be thoroughly examined and critically analysed to answer some of these questions.

13 African Policy Research Institute (APRI). (2022). Climate Finance in Africa : Needs, challenges and opportunities to deliver the financial resources required to drive low-carbon and climate resilient development https://afripoli.org/projects/ climate-finance/climate-finance-in-africa-flagship-report

14 APRI. (n.d.). Climate Finance in Africa : Needs, challenges and opportunities to deliver the financial resources required to drive low-carbon and climateresilient development

15 Emily Tyler and Lonwabo Mgoduso. (2022). Just Energy Transitions and Partnerships in Africa : A South African Case Study. Meridian Economics. https://www.iddri.org/sites/default/files/PDF/Publications/Catalogue%20Iddri/Rapport/202211-Ukama-JETPs-ZAF.pdf

16 Emily Tyler and Lonwabo Mgoduso. (n.d.). Just Energy Transitions and Partnerships in Africa : A South African Case Study.